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The U.S. Federal Reserve left interest rates unchanged on Wednesday but strongly signaled it could still tighten monetary policy by the end of this year as the labor market improved further. Fed Chair Janet Yellen, speaking after the central bank's latest policy statement, said U.S. growth was looking stronger and rate increases would be needed to keep the economy from overheating and fueling high inflation.

The FOMC will not hike. This may seem to merely confirm what has become a consensus view. As of this morning many of market participants have come around to feeling there is no basis for FOMC to hike rates Wednesday afternoon. Yet, this sentiment was not nearly as strong into and immediately after the Fed’s Jackson Hole Policy Symposium "hawk-fest" three-and-a-half weeks ago.

Market volatility is low, U.S. census data shows income gains have reached the middle class, and workers are clawing back a larger share of national income. For now, at least, no international risk stands out and inflation may even be picking up.

The U.S. dollar rose across the board on Friday after August’s consumer prices advanced 0.2%, beating expectations. The core CPI rose 0.3% ahead of a 0.2% forecast. The USD had taken a hit on Thursday after retail sales were lower than anticipated but managed to turn the corner as consumer prices climbed giving food for thought to the members of the FOMC at the data dependent U.S. Federal Reserve.

U.S. equity markets are expected to open slightly higher again on Wednesday, boosted by expectations that the Fed will once again have to wait before raising rates following mediocre jobs and poor ISM and PMI reports in recent days.

Despite the pronouncements by a chorus of Federal Reserve officials thatnow is the time is to raise interest rates, the data does not seem to support that position. Yesterday’s ISM non-manufacturing data was case in point as it posted at 51.4--the worst reading in 6 years. If you couple that with Friday’s disappointing employment number and the ISM manufaruring data that shows U.S. manufacturing in contraction, it seems the Fed will be either frustrated or flummoxed as the case to raise rates does not jive with the data.

The U.S. dollar stumbled on the news that the economy added fewer jobs than expected in August. The U.S. nonfarm payrolls (NFP) report showed only 151,000 positions versus the forecast of 180,000. Unemployment rate kept steady at 4.9%. The American currency was able to recover and finish the week ahead versus major pairs but the disappointing employment report puts a big dent on the chances of a rate hike in September.

This week’s disappointing jobs report and manufacturing data from the United States--the world’s largest economy--has dampened expectations for a rate rise in 2016, though it has not been entirely eliminated from the equation. Unfortunately it just means that uncertainty about the next rate rise will remain in place for far longer than one would have liked.

The U.S. and it's central bank will be centre of attention once again on Friday as we get the latest labour market report for August and try to determine what it means for interest rates in the coming months.The U.S. and it's central bank will be centre of attention once again on Friday as we get the latest labour market report for August and try to determine what it means for interest rates in the coming months.

Dollar bulls received ample encouragement on Tuesday following the impressive consumer confidence report that bolstered sentiment toward the U.S. economy. The Consumer Confidence Index (CCI) for August lurched to its highest level in almost a year at 101.1 consequently reinforcing expectations over the Federal Reserve raising U.S. rates in 2016.